Despite the fuel for concern, gas prices in RGV are quite tame

J.R. Ewing of 1980s’ “Dallas” fame might be happy if he were still alive, watching oil prices climb, but for the rest of us, not so much.

Last week, for the first time in four years, the national average for a gallon of regular gas exceeded $4 per gallon, which dates all the way back to August 2022 when we were just recovering from the COVID pandemic.

This week, Monday, the national average was $4.11, according to AAA.

By the end of this week, who knows. Depends on what happens in the Middle East.

The one bit of good news is, if gas prices continue to increase, Texas is still one of the best states to tank up.

If you steered across Hidalgo County the start of this week, you saw the numbers on the digital signs at convenience stores twitching upward again, leaving us all to wonder, when will it reach its newest ceiling, so to speak.

There is a catch, though — here in the Rio Grande Valley, while the purse sting is real, we are witnessing a strange economic phenomenon: the “Texas Shield,” which is why as of this Monday, the regular gas average in Hidalgo County hovered around the $3.70 mark.

Before the start of the war Feb. 28, the average local gas price was $2.87 per gallon. (Source: AAA Gas Prices.)

A year prior, February 2025, the same gallon of regular gas cost consumers an average of $2.71 per gallon.

“The price is going in the wrong direction.” Duh? Don’t feel too bad, though, relatively speaking. The same gallon of gas in California, on average, is costing drivers $5.29, while the national average is pegged at $4.11.

It begs the question: why is Texas, and specifically our corner of it, buffered from the worst of this global gas storm?

The Refinery Powerhouse

The first reason is simple geography and infrastructure. The Lone Star State doesn’t just sit on top of the oil; it’s where it’s cooked, so to speak. Currently, Texas accounts for over 30 percent of the entire refining capacity of the U.S.

We have 31 refineries humming along the Gulf Coast. In fact, the first new major refinery in the U.S. in 50 years was recently announced for the Port of Brownsville. Once online, it’s expected to annually process approximately 60 million barrels of American light shale oil (Permian Basin black gold).

Quick factoid — if Texas has 31 refineries, how many does Australia have?

Only two, while the remaining 80 percent is imported from southeast Asia.

“That makes no sense.”

Tell that to the Aussies. The politicians there reportedly believe that it’s cheaper to buy it from places with cheap labor and less regulatory sanctions like Singapore, China, and South Korea than spend at least $5 billion (US dollars) to build a new one.

Off topic, sorry, but it’s easy to see how this oiland-gas business can get confusing, and that was before this Strait of Hormuz business hit the news wire after the start of this Iran War began Feb. 28.

Because Texas refines so much of the fuel its drivers consume, drivers don’t pay the “distance premium” other states do.

For example, when a gas station in Florida, Arizona, or Georgia needs a shipment, that fuel has to travel through thousands of miles of pipeline or be trucked in at a massive logistical cost, getting costlier by the day.

In the RGV, at least until the new refinery is open, we still have it better compared to most, thanks to oil refineries in Corpus Christi and Houston. From there, the gas sent to South Texas comes to us mainly via underground pipelines.

The 20-Cent Advantage

Then there is the matter of the taxman. While other state legislatures have hiked fuel taxes to cover budget overspending, Texas has held a steady line.

Our state gas tax remains at 20 cents per gallon — one of the lowest in the nation.

In fact, the last time the state fuel tax saw an increase was when Ann Richards was still governor, in 1991.

To put that in some degree of perspective, drivers in California are currently being hit with over 70 cents in state taxes alone. On a 20-gallon fill-up for a truck, a Texan, either a legitimate owner or a car thief, is saving $10 purely on taxes compared to a driver on the West Coast.

Of course, being protected from either the taxman or distance doesn’t mean we are immune from the increased climb in oil and gas prices, thanks to the ongoing war in Iran, which has, politics aside, thrown global energy markets into a tailspin.

One day the market is happy, the war will end soon; and the next day, no, this war may take a while, and the Strait of Hormuz will remain closed to American interests. Spike those oil prices.

With nearly a fifth of the world’s oil supply normally passing through the strait, which isn’t in international waters, by the way, but rather, in territorial waters (Iran and Oman), the recent war turmoil has choked off supply, increasing demand.

So even though Texas produces and refines its own supply, oil is a global commodity. Meaning, when the price of Brent Crude surges past $120 a barrel, the ripple effect eventually reaches the pumps at the convenience store down the street.

The user of regular gas is groaning, while the overstressed user of diesel is both groaning and moaning.